1. Cheque: Cheque is a negotiable (which can be transferred to another person in exchange of money) instrument drawn on a specified banker ordering the banker to pay a certain sum of money to the drawer of cheque or another person. Cheque is always payable on demand.
2. Types of Cheque:
2. Types of Cheque:
i. Ante Dated Cheque: A cheque bearing a date prior to actual date of signing the cheque or opening of an account is called an ante dated cheque which is valid and can be paid till it become stale. For Ex. A cheque is dated 9th Jan 2013 for an account opened on January 25, 2013 can be paid.
ii. Stale Cheque: If the validity of the cheque has already expired it is called stale cheque which cannot be paid. The normal maximum validity of cheque is 3 months earlier it was 6 months. If the cheque is presented after the 3 months, it will be returned.
iii. Post Dated Cheque: The cheque which bears a date subsequent to the date on which it is drawn. For ex. A cheque drawn on 10th January, 2013 bears the date of 12th January, 2013.
3. Crossing of Cheque: Crossings refers to drawing two parallel lines across the face of the cheque.
A crossed cheque cannot be paid in cash across the counter, and is to be paid through a bank either by transfer, collection or clearing.
A general crossing means that cheque can be paid through any bank and a special crossing means where the name of the Bank is indicated on the cheque can be paid only through the named bank.
4. Dishonour of Cheque: Non – payment of cheque by the paying banker with a return memo giving reasons for the non – payment.
5. Demand Draft: Demand draft is defined as an order to pay money drawn by one office of a bank upon another office of the same bank for a sum of money payable to order on demand.
Cheque and Demand draft both are used for transfer of money.
Difference b/w Cheque & DD
A cheque can be bounce but D.D cannot be bounce as it is already paid.
6. Current account: Current account with a bank can be opened generally for business purpose. There are no restrictions on withdrawals in this type of account. No interest is paid in this type of account.
7. NEFT (National Electronic Fund Transfer): NEFT enables funds transfer from one bank to another but works a bit differently than RTGS. NEFT is slower than RTGS. The transfer is not direct and RBI acts as the service provider to transfer the money from one account to another. You can transfer any amount through NEFT, even a rupee.
Need of NEFT: We can use this facility if we want to transfer funds online in a day or two. NEFT can make life easier for those who need to send money to their parents or children living in another city. It cuts the trouble of issuing a cheque or draft and posting it. It can also be done through internet banking.
8. RTGS (Real time gross settlement ): RTGS system is a funds transfer systems where transfer of money or securities takes place from one bank to another on a "real time" and on "gross" basis.
Settlement in "real time" means payment transaction is not subjected to any waiting period. The transactions are settled as soon as they are processed.
"Gross settlement" means the transaction is settled on one to one basis without bunching or netting with any other transaction. Once processed, payments are final and irrevocable.
Minimum & Maximum Limit of RTGS: 2 lakh and no upper limit.
The implementation of RTGS systems by Central Banks throughout the world is driven by the goal to minimize risk in high-value electronic payment settlement systems.
In an RTGS system, transactions are settled across accounts held at a Central Bank on a continuous gross basis. Settlement is immediate, final and irrevocable (which cannot be changed or reversed).
9. CBS (Core Banking Solutions): Core Banking Solutions is the process, where branches of the bank are connected to a central host and the customers of connected branches can do banking at any breach with core banking facility.
Advantages for both to the customers & the banks:
Customer: i. Transactions of business from any branch.
ii. Lower incidence of errors.
iii. Better funds management due to immediate availability of funds.
Banks: i. Better customer service.
ii. Availability of accurate data.
iii. Increased business volume with better asset liability management and risk management.
10. BOND: Publicly traded long term debt securities issued by corporations and governments, whereby the issuer agrees to pay a fixed amount of interest over a specified period of time and to repay a fixed amount of principal maturity.